The Joint Corp.

Good day and thank you for standing by. Welcome to the Joint Corporation Q2 2021 Financial Results Conference Call. At this time, all participants are in a listen-only mode. At the speaker's remark, there will be a question and answer session. To ask a question during that time, you will need to press star 1 on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance during the call, please press Par 0. I would now like to hand the conference over to your first speaker, Mr. David Bernard, LHA Investor Relations. Thank you. Please go ahead.

Thank you, Robert. Good afternoon, everyone. This is David Bernard of LHA Investor Relations. On the call today, President and CEO Peter Holt will review our second quarter 2021 performance metrics and provide an update on the business. CFO Jake Singleton will detail our financial results and guidance. Then Peter will close with a summary and open the call for questions. Please note we are using a slide presentation that can be found at https backslash ir.thejoint.com backslash events. Today, after the close of market, the joint corporation issued its financial results for the quarter ended June 30th, 2021. If you do not already have a copy of this press release, it can be found on the investor relations section of the company's website. As provided on slide two, please be advised today's discussion includes forward-looking statements, including statements concerning our strategy, future operations, future financial position, and plans and objectives of management. Throughout today's discussion, we will present some important factors relating to our business that could affect these forward-looking statements. The forward-looking statements are made based on our current predictions, expectations, estimates, and assumptions, and are subject to the risks and uncertainties that may cause actual results to differ materially from the statements we make today. Factors that could contribute to these differences include, but are not limited to, the continuing impact of the COVID-19 outbreak on the economy and and our operations, including temporary clinic closures, shortened business hours, and reduced patient demand, our failure to develop or acquire company-owned or managed clinics as rapidly as we intend, our failure to profitably operate company-owned or managed clinics, and the other factors described in risk factors in our annual report on Form 10-K as filed with the SEC for the year ended December 31, 2020, as updated or revised for any material changes described in any subsequently filed quarterly reports on Form 10-Q or other SEC filings. We anticipate filing our June 30, 2021, 10-Q on August 6. As a result, we caution you against placing undue reliance on these forward-looking statements and encourage you to review our filings with the SEC for discussion of these factors and other risks that may affect our future results or the market price of our stock. Finally, we are not obligating ourselves to revise our results or publicly release any updates to these forward-looking statements in light of new information or future events. Management uses EBITDA and adjusted EBITDA, which are non-GAAP financial measures. These are presented because they are important measures used by management to assess financial performance. Management believes they provide a more transparent view of the company's underlying operating performance and operating trends than GAAP measures alone. Reconciliation of net income to EBITDA and adjusted EBITDA is presented in the press release. The company defines EBITDA as net income or loss before net interest, tax expense, depreciation, and amortization expenses. The company defines adjusted EBITDA as EBITDA before acquisition-related expenses, bargain purchase gain, net gain loss on disposition or impairment, and stock-based compensation expenses. Turning to slide three is my pleasure to turn the call over to Peter Holt.

Thank you, David, and I welcome everybody to the call. The strength of our business model continues to deliver, and I'm delighted to inform you that we broke several records this quarter. More importantly, we expect it to continue to accelerate growth and to build upon our financial foundation. During the second quarter, we opened 41 clinics, including five Greenfield clinics, And in April, we achieved a significant milestone of opening our 600th clinic. Additionally, we sold 63 franchise licenses during the quarter. This metric supports our midterm goal to have 1,000 clinics in operation by the end of 2023, as well as our drive for longer-term expansion. I'd like to pause and welcome our new investors. The Joint is revolutionizing access to chiropractic care. Our clinics are located in convenient retail settings. We provide concierge-style membership-based services without the need for insurance or appointments with attractive pricing and convenient hours. Our growth strategy is to build our brand, increase awareness of the efficacy of chiropractic care, deliver an exceptional patient experience, and open more clinics. We are already the largest, most recognizable provider of chiropractic care in the country. However, we only account for approximately 1% of this highly fragmented, nearly $18 billion chiropractic care market. We have a significant opportunity to continue to increase our market share as we further refine and expand the market itself. Turning to slide four, I'd like to review a few highlights of our second quarter 2021 results. In a moment, Jake will discuss our financial results in detail. We had a strong Q2 2021. It was further enhanced by comparison to the Q2 2020, which was the nadir of the impact of the COVID-19 on our business. To provide context, I'll include sequential comparisons as well. System-wide sales grew to $87.8 million, increasing 64% compared to our Q2 2020 and 13% compared to Q1 2021. Our comp sales for clinics that have been open for at least 13 full months grew 53%. compared to Q2 2020, and in Q1 2021, 13-month comp sales grew 21% compared to the same period prior year. Revenue grew 61% compared to Q2 2020, and 15% compared to Q1 2021. Adjusted EBITDA increased $3.8 million, up 237% from Q2 2020, and 9% up from Q1 2021. And on June 30, 2021, our unrestricted cash was $18.8 million compared to $20.6 million at December 31, 2020. Turning to slide five, I'd like to review our portfolio. Regarding clinics, during Q2, we opened a record-breaking 41 clinics, 36 franchised and five greenfields, compared to 12 and one respectively in the same quarter last year. This brings our six-month total to 54 clinics open, compared to 30 in the first half of 2020 and 29 in the first half of 2019. Four of our greenfields were in a cluster stronghold in Arizona, California, and New Mexico. Our fifth greenfield in Virginia marks our first corporate clinic in a brand-new market in over five years. This important milestone expands our presence in the Southeast and is supported by our continuous operational improvements. Most recently, we've benefited from advancements in our grand opening program and investments in digital marketing. During the quarter, three of our franchise clinics and one Greenfield opened in April achieved Go Elite status, which means they attracted over 400 patients and reported over 30,000 in sales in the first two months of operation. On April 1st, we acquired eight previously franchised clinics, which were immediately accretive to the bottom line. Two of the acquired clinics were in the Phoenix-Scottsdale market, expanding our reach in our headquarters region. Six of the acquired clinics were in North Carolina, made possible by the repurchase of the RD territory in that state, further broadening our corporate clinic presence in the southeast. Once again, we did not close any clinics this quarter. In summary, at June 30, 2021, we had 630 clinics in operation, consisting of 555 franchise clinics and 78 corporate-owned or managed clinics. Our portfolio mix shifted slightly with our corporate clinic representation increasing 1% to 12% of the total and our franchise clinics adjusting to 88%. At the quarter end, we had 282 signed agreements in some level of development. This compares to 260 at March 31, 2021 and reflects the increased interest in our franchise system. Turning to slide six, We're tracking to our midterm goal of 1,000 clinics open by the end of 2023, and we're confident in our continued clinic expansion through our franchises and Greenfield openings. One natural extension of our customer base is to build upon our commitment to support the armed forces. We continue to honor our military by providing them discounts to our services across our clinics. In July, we announced our partnership with the Army and Air Force Exchange Service, We'll bring chiropractic care on base to better serve members of the entire military community. Our initial target clinic sites include Air Force bases in Phoenix, Arizona, Tampa, Florida, and Trenton, New Jersey. The exchange serves an eligible customer base of 33 million active duty service members, their families, retirees, and their families, along with disabled veterans and government civilians who work on the military installations. The exchange has more than 4,900 facilities around the world. Turning to slide seven, in the second quarter of 2021, we sold a record-breaking 63 franchise licenses, bringing our six-month sales to 89. This compares to 11 and 35 franchise license sales for the second quarter and the first half of 2020, respectively. Our brand continues to attract sophisticated, well-capitalized franchisees with proven track records. During the second quarter, our regional developers sold 87% of their franchise licenses, and they continued to accelerate our growth. At June 30, 2021, 70% of our clinics were supported by 21 RDs, which covered 59% of the Metropolitan Statistical Areas, or MSAs. In May, we elected to renew two RD agreements with continued growth opportunities in those areas. This increases our aggregate 10-year minimum development schedule for new R&D territories established since 2017 to 693 clinics. Now, keep in mind that a portion of this clinic count is already opened, but still provides a large foundation to fuel our continued clinic expansion and sales growth. Turning to slide eight, let's discuss marketing. We continue to set monthly records for new patient acquisitions during Q2. with the best April, May, and June months in our history. This reflects growing consumer confidence, the benefit of increased national awareness advertising, and the strong marketing contributions of our regional co-ops. In May, we kicked off a new marketing campaign emphasizing the positive impact of chiropractic on good posture, particularly relevant to the rise of remote work and distance learning. The campaign was supported by 18 TV and radio interviews from media around the country and and we're pleased to drive over 14,000 unique visitors to our new posture website. In June, we launched a win-back campaign directed to our inactive patients. This is our fourth consecutive year executing this direct marketing promotion, and I'm happy to report that the number of patients who reactivated their membership rose 32% versus 2020. Finally, we continue to reap the benefits of our new patient digital lead nurturing platform, which we rolled out in Q4 2020. This technology enables our clinic teams to guide their digital leads through their initial journey to chiropractic. In Q2 2021, our digital lead conversion reached an all-time high, improving 38% compared to our performance in 2020. Turning to slide nine, let's review our initiative to improve our IT infrastructure. I'm pleased to announce that in July, we successfully launched Access 1.0, the first iteration of our new IT platform. Thanks to the extraordinary efforts by our implementation team and our franchise community, we are now live nationwide. As a result, over 630 clinics transitioned from our former homegrown IT platform to our new licensed CRM built to foster continuous improvement. We now have moved to the typical debugging phase that any IT transition of this magnitude must go through. Looking forward, we're preparing to unleash the power of our new CRM platform with future enhancements that include improved business intelligence, marketing automation, patient portal, mobile check-in, and more. This first critical phase was a great accomplishment, and I'm incredibly grateful for the dedication and efforts of everyone in our network that helped to make this a reality. And with that, Jake, I'll turn it over to you.